Correlation Between Algoma Steel and QUALCOMM Incorporated

Can any of the company-specific risk be diversified away by investing in both Algoma Steel and QUALCOMM Incorporated at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Algoma Steel and QUALCOMM Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Algoma Steel Group and QUALCOMM Incorporated, you can compare the effects of market volatilities on Algoma Steel and QUALCOMM Incorporated and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Algoma Steel with a short position of QUALCOMM Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and QUALCOMM Incorporated.

Diversification Opportunities for Algoma Steel and QUALCOMM Incorporated

0.8

Correlation Coefficient

Algoma Steel  QUALCOMM Incorporated

Very poor diversification

The 3 months correlation between Algoma and QUALCOMM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and QUALCOMM Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALCOMM Incorporated and Algoma Steel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Algoma Steel Group are associated (or correlated) with QUALCOMM Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALCOMM Incorporated has no effect on the direction of Algoma Steel i.e., Algoma Steel and QUALCOMM Incorporated go up and down completely randomly.

Pair Corralation between Algoma Steel and QUALCOMM Incorporated

Assuming the 90 days trading horizon Algoma Steel Group is expected to generate 1.79 times more return on investment than QUALCOMM Incorporated. However, Algoma Steel is 1.79 times more volatile than QUALCOMM Incorporated. It trades about 0.14 of its potential returns per unit of risk. QUALCOMM Incorporated is currently generating about 0.08 per unit of risk. If you would invest  707.00  in Algoma Steel Group on April 25, 2025 and sell it today you would earn a total of  213.00  from holding Algoma Steel Group or generate 30.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Algoma Steel Group  vs.  QUALCOMM Incorporated

Algoma Steel Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Algoma Steel Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Algoma Steel displayed solid returns over the last few months and may actually be approaching a breakup point.

QUALCOMM Incorporated

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QUALCOMM Incorporated are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, QUALCOMM Incorporated may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Algoma Steel and QUALCOMM Incorporated

The main advantage of trading using opposite Algoma Steel and QUALCOMM Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, QUALCOMM Incorporated can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in QUALCOMM Incorporated will offset losses from the drop in QUALCOMM Incorporated's long position.

The idea behind Algoma Steel Group and QUALCOMM Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.